Thursday, May 25, 2006

Software piracy decreases. Is it good news?

Economic Times has this article on the recent figures of Software piracy in India and elsewhere. Figures look very encouraging indeed. Software piracy rate stands at 72% in India, a drop in 2% over the previous year though the monetary losses due to piracy stand at $566 m, higher than what seen in the previous year.

So less of piracy implies more of software jobs, more taxes and good economic growth, I guess Software industry is all set to uncork and pop open the champagne as the piracy rates show south bound trend.

But isn’t this just one side of the argument...I would ask;1) Would India be a software powerhouse as it is today, if piracy had been curtailed to half the level it is today?2) Would it not affect the economy of the country adversely, if piracy in general is reduced to zero?

High piracy rates in India have done one thing...it have given every budding software engineer access to rich development tools at a very early stage, probably when they are studying or early part of there career. One reason for flourishing software industry in India is the availability of people with good software engineering foundation. Will it not be a fair argument to say that piracy has aided in laying this foundation.Saying goes as "there are more pirated Windows OS on desktops than genuine free Linux". Now availability of a pirated Windows OS at dirt cheap price has made it that much more easier for people to connect to different people, exchange ideas, explore/learn/master new technologies and best practices, which in a way has contributed to the software industry to flourish.

Saying about China goes as "If we can make it Chinese can fake it". Piracy in China is known to be at legendary proportions (when compared to India). Piracy here is not restricted to software or music cd's, DVD’s etc. but it extends to products as well....Now what has this done to China....it has made cheap goods available to local population, as its pirated, the cost of goods are less and thus have kept the inflation of the country low, which in turn has helped the economy. It has helped generate employment for local population. Going by unofficial figures, 1/3rd of Chinese GDP is driven by these counterfeit products.

So does that imply, we need to support piracy? Well no, rampant piracy is also a bad idea. Research says;- the more the piracy the more crippling effect it has on your local software industry.- The more the piracy, the greater will be the loss to the exchequer in terms of tax revenue loss.- The more the piracy, it makes genuine software that much more costly and thus this extra burden percolates to other areas which use these software thus making the end products that much more costly.- For every 10% increase in average worldwide piracy rate, close to 1 million jobs could be lost and it could cost close to $400 billion.

So piracy is kind of necessary evil. Too much of it, you sink and too less of it also will hurt.